Arctic Frontier: Resource and Transit Hopes Should Be Cautioned
Resources, Routes, and Boundaries
The Arctic is considered the last frontier in energy exploration and development. The region catches headlines from time to time — an international maritime boundary dispute between Russia and Norway, the 2007 planting of a Russian flag under the North Pole, and lately, the effect of melting sea ice. The latest Intergovernmental Panel (IPCC) report on climate change will expose how the oceans are literally taking the heat, compared to the atmosphere. This bodes ill for the Arctic, as warming oceans melt sea ice. The U.S.’s Arctic policy, articulated earlier this year by President Obama, is to advance national security, pursue responsible Arctic stewardship and strengthen international cooperation.
Arctic States, and members of the Arctic Council, with land masses contiguous to the Arctic Ocean, are Canada, Denmark, Norway, Russia and the U.S. These countries have the right, up to 200 nautical miles, to claim an exclusive economic zone which allows them exclusive jurisdiction over the natural resources, both in the water column and in the seabed. And, these States will be able to claim additional continental shelf jurisdiction beyond 200 miles. The current international legal framework for which these claims are made, resides under the United Nations Convention on the Law of the Sea (UNCLOS). Iceland, Finland and Sweden have land above the Arctic Circle, and are part of the Arctic Council. Recently twelve countries were given observer status, including China, India, the U.K., Germany, and other large EU states.
There is a dash by Arctic States to define the outer limits of their respective continental shelves and submit applications to the Commission on the Limits of the Continental Shelf, the UN body that makes recommendations about countries’ seabed territorial claims. Russia and Norway are so far the only Arctic States that have submitted continental shelf claims. Dr. Robert Smith, now retired U.S. State department geographer, notes that Canada is submitting its application by year end. The work of identifying seabed jurisdiction is painstakingly challenging in the Arctic, taking years to conclude. The U.S. is not a party to the UN Law of the Sea, which complicates its submitting a claim to the Commission. Denmark is expected to submit its application in 2014.
As the Arctic melts, land and resources ownership concerns rise. “The U.S. Geological Survey estimates that 90 billion barrels of oil, or 13 percent, of the world’s undiscovered reserves are within the Arctic, fully one-third of those reserves are concentrated in Alaska’s territory,” writes Andrew Holland in a recent article. Coal, iron and copper may lie in abundance. Only in the last decade, since 2003, have U.S., Canadian and Danish icebreakers embarked to find their respective continental shelves. The U.S. has been creating its geologic database to define its shelf, and Dr. Smith was involved in the efforts.
U.S. Arctic oil and gas exploration is off of the north coast of Alaska. Shell Oil recently stayed its Arctic drilling efforts after facing continual challenges. Infrastructure is markedly lacking. The U.S. Coast Guard is considering building a port on the North shore of Alaska since there are currently no harbors present. “The U.S. realizes there will be more traffic in coming decades, so we need more of a presence there to enforce laws and regulations in our zone,” says Smith. “Other countries feel the same way.” ConocoPhillips announced that it will not drill in the Chukchi Sea in 2014. “The Beaufort and Chukchi seas have the potential to produce 500,000 barrels of oil each day, but they also nurture whales, walruses, seals and polar bears,” notes an LA Times article.
The other major issue in the Arctic is the warming occurring in area. In 2007, when Dr. Smith travelled on the U.S. Coast Guard icebreaker the USCGC Healy, passage through the Arctic was only by icebreaker. “Now there is a fair amount of traffic going through the area,” he says. And the single-most interested country with Arctic dreams is China. ”As any mariner knows, every day at sea costs thousands and thousands of dollars,” he notes. Products being transported from Europe and Asia are looking to come across the Canadian and Russian Arctic areas. The Canadian view of its Arctic waters are also challenging, claiming that its Arctic archipelago encloses internal waters. The U.S. sees this area as international waters. Smith suggests, with increased melting, this will be an issue within the decade.
China sources natural resources all over the globe. Its Arctic interests lie in finding the best transit routes. “When considering Europe, the Mediterranean, and the Persian Gulf, a very likely best point from A to B will be over a polar region,” explains Smith. “Passing over Canada or Russia is especially beneficial to China.” China wants to be part of the Arctic Council, a governance body that researches Arctic issues. But China is not an Arctic State. “By 2025, they will be the biggest player in the Arctic. By 2020, 5-15% of China’s international trade, mostly container ships, would use the Arctic,” Dr. Smith noted in his presentation in October 3 at Dallas Committee on Foreign Relations. That’s $683 billion worth of trade, consisting of 10% of China’s trade in total, as noted by the director of Polar Research Institute of China.
A Fragile Environment
The policymakers summary from the IPCC indicates that more of the earth’s warming is going to oceans. Ocean waters are warming and acidifying, even warming the deeper layers of the ocean. This is even worse news for oceans, as the report notes:
• The global ocean will continue to warm during the 21st century. Heat will penetrate from the surface to the deep ocean and affect ocean circulation.
• It is very likely that the Arctic sea ice cover will continue to shrink and thin and that Northern Hemisphere spring snow cover will decrease during the 21st century as global mean surface temperature rises.
“Regardless of what position you take on the cause, there is warming occurring in the Arctic,” says Smith from firsthand experience. “That has a lot of repercussions and impacts related to easier access to resources and navigational issues. It is negative for island states— the melted ice has to go somewhere.” He also notes that climate in the polar regions drive weather patterns, thus impacting patterns across the globe.
With melting ice, fisheries would move into the Arctic, particularly in the Barents Sea, north of Norway and Russia. “Currently there are whales that migrate to the Arctic. Polar bears are suffering the most from less ice. The Arctic is their home, and they have to swim for thousands of miles in a season to get food.” With change of temperature, comes change of nutrients. “The whole ecosystem becomes different and is changing,” reflects Smith. ” I think scientists at this point are speculating. They do not know exactly what will happen.”
The Arctic is a very fragile environment. “Even though there is warming going on with less ice, it is still very fragile,” states Smith. “If something goes wrong, it takes forever to clean up.” He contrasts the Arctic with Gulf of Mexico exploration and its warmer waters and environment: “The environment in the Gulf changes and adjusts better than Arctic.” Currently there are mainly Majors [oil and gas firms] exploring in the Arctic, Smith adds. “If exploration is allowed more of the year, then we may get more players. The former Soviet Union had a bad record in the Arctic, however Russia is looking to the West at the Majors to help them explore.” ExxonMobil and Rosneft are establishing a research center, Arctic Research and Design Center for Continental Shelf Development.
With increased U.S. supply in oil and gas from onshore developments, the need to exploit Arctic resources seems less necessary. With easier access to Arctic areas from melting ice, the appeal for the oil and gas Majors, Russia, and China is obvious. Better governance of Arctic areas is needed, but the tradeoffs and environmental risks should be measured with the new shale resources and other sources of energy in mind.